Many people come to eBay to look for a bargain. If you are selling items from around the house, something is better than nothing, therefore profit margin isn’t as important. However if you are purchasing items with the specific intention to resell, your income expense ratio will be very important.
All sellers want to make money; else they would offer the item to Freecycle or a thrift store. But the truth is not every item sells. Those who have no regard for cost of goods sold and don’t factor in fees and time actually lose money by selling on eBay.
At the very minimum, you want to break even. Try to minimize those occurrences too, as it is a waste of your precious time. To ensure you do not go into the red, take the price you paid for an item and consider all other associated costs, i.e. listing fees, final value fees, and PayPal fees. To better illustrate, below is an actual example.
You purchase a pre-owned men’s sport coat and list it with an opening bid of $9.99. The item sells, but only with one bid of $.9.99.
Cost of men’s sport coat from second hand store, including tax: $6.35
Listing fees, including multiple photos, and the gallery option: $1.05
Final value fee: $.52
PayPal fee on your premier account to receive money: $.60
It cost you $8.52 and it sold for $9.99 which means you made $1.47 profit. But wait what about the time and gas it took you to go to the thrift store? What about factoring in the cost of your internet service, ink and just simply for what your time is worth?
The above example is very real and happens every day. Some sellers think that because they make a purchase for about six bucks and sold it for ten, they made a profit. A good rule of thumb is: do not buy anything to resell unless you are reasonably confident you can make at least a $10 or more profit.
You can only know what will sell by doing your research ahead of time. One suggestion is to pick a category and know the top four brands that sell for big bucks. Then only purchase those select few. Or call a friend while you are at the store and have her look up the item on eBay to see selling prices.
Buying smart is the only way you will make a profit. It is that simple. We’ve all paid stupid tax when we first started. Don’t think it will make a profit; but rather know it will.